U.S. stocks retreat after S&P 500 Index rallies for six weeks

U.S. stocks fell after a six-week rally left the Standard & Poor’s 500 Index trading at its most expensive valuation since July 2011.

Google Inc. declined 0.6% as Chairman Eric Schmidt adopted a plan to sell as many as 3.2 million shares in the operator of the world’s most popular search engine. BlackBerry shares slid 4.6% while Apple Inc. rose 0.9%, after Home Depot Inc. said it will exchange 10,000 BlackBerry models with iPhones. AOL Inc. jumped 6.2% after an analyst recommended investors buy the shares.

The S&P 500 fell 0.1% to 1,516.19 at 3:11 p.m. in New York. The equity benchmark last week reached its highest level since November 2007, completing its longest streak of weekly gains since August. The Dow Jones Industrial Average lost 26.11 points, or 0.2%, to 13,966.86 today. Trading in S&P 500 companies was 24% below the 30-day average at this time of day.

“We’re extremely overbought, but that doesn’t mean the market can’t continue higher,” T. Doug Dale, chief investment officer at Jackson, Mississippi-based Security Ballew Inc. Wealth Management, which oversees $500 million in assets, said in a telephone interview. “But investors must be wary of air pockets, as in major downturns that can happen quickly.”

‘Stocks Pause’

The S&P 500 has rallied 6.3% so far in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than-estimated earnings. The index is trading at 15 times reported earnings, up from a low of 13 in 2012 and compared with the six-decade average of 16.4, data compiled by Bloomberg show.

The gauge is about 3% below its record high reached in October 2007. It has more than doubled since bottoming in March 2009 as the Federal Reserve conducted three rounds of bond-buying to lower interest rates and boost economic growth.

“With the strong start this year, it’d be very understandable if stocks pause here,” James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, said by phone. His firm manages $759 billion. “The focus is going to be what the private sector can do to generate growth. The market understands that the public sector is not going to deliver any big presents.”

Finance Ministers from the 17-member euro area were scheduled to meet today in Brussels to discuss aid to Cyprus and Greece as concern over the region’s sovereign-debt crisis revives. Group of 20 finance chiefs and central bankers will gather in Moscow on Friday.